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Thursday, November 11, 2010

AFP: China resisting being economic lifeline for US: IMF

China is resisting pressure to become a locomotive to pull the floundering US economy out of its hole, notably by stubbornly pegging its yuan to the dollar, a senior IMF official said Tuesday.

Right now, the booming economies of emerging markets Brazil, India and China are like "rockets" being fuelled by US and European investor inflows, Nicolas Eyzaguirre, the head of the IMF's Western Hemisphere Department, told a business conference in Sao Paulo.

In return, slumping developed countries are trying "to attach ropes to those rockets to drag themselves out" of their low-growth situations, he told the event, hosted by Britain's magazine The Economist.

But "China is avoiding being caught by the rope," Eyzaguirre said, pointing specifically to Beijing's policy of keeping its currency in line with the sliding US dollar.

The currency issue is the headline topic of a G20 summit in South Korea later this week.

Brazil has voiced the anger felt by several countries over a "currency war" seen being waged between the United States and China, in which their monies are being devalued to secure an export advantage at the expense of other nations.

A fellow speaker at the conference, Alfonso Celso Pastore, a former head of Brazil's central bank said the US government had little option but to print money, as it was doing, to devalue the dollar and hope for an export-driven recovery.